Certified Funds Code of Practice - Schedule 2 (Jersey Expert Fund Guide)

Summary

This is Schedule 2 to the Jersey Financial Services Commission's Certified Funds Code of Practice, known as the Jersey Expert Fund Guide. It defines what qualifies as an Expert Fund, who counts as an Expert Investor, and the structural, governance and disclosure standards such a fund must meet to use a streamlined authorisation process under the Collective Investment Funds (Jersey) Law 1988.

• Investor eligibility: Only Expert Investors, as defined by professional activity, net worth (US$1,000,000+), minimum investment (US$100,000+), or connection to a fund service provider, may invest, and each must acknowledge the investment warning in writing before subscribing.
• Governance and local presence: Fund companies, general partners of limited partnerships, and trustees of unit trusts must have at least two Jersey resident directors with appropriate experience, and ultimate management responsibility cannot be delegated.
• Investment Manager standing: The Investment Manager (and certain distributors) must meet good-standing tests covering disciplinary history, convictions, solvency, jurisdiction of establishment/regulation, relevant experience, and the four-eyes or six-eyes span-of-control principle; written confirmation and administrator counter-signature are required as part of the application.
• Administration and monitoring: Every Expert Fund must appoint an administrator, Manager and/or trustee with Jersey-resident directors, staff and physical presence, who must monitor the Investment Manager's compliance with investment and borrowing restrictions and keep sufficient records in Jersey.
• Custody: Open Funds must use a separate Jersey-based custodian/trustee unless the fund is a hedge fund using a sufficiently rated prime broker, or prior JFSC clearance is obtained.
• Naming and offer document: The fund name must not be undesirable or misleading, and the Offer Document must meet the requirements set out in Section 3, including the prescribed investment warning and ongoing disclosure obligations.
• Reporting of concerns: Administrators, Managers or trustees who become aware of issues casting doubt on the Investment Manager's good standing must notify the JFSC.

Deviations from these expected characteristics, or uncertainty about how a proposed structure fits the Guide, require case-by-case approval or prior clearance from the JFSC before or as part of the authorisation application.

Key obligations

• Only permit investment by persons meeting the Expert Investor definition, and obtain written acknowledgement of the investment warning before they invest
• Appoint at least two Jersey resident directors (or equivalent) to the fund company board, general partner, or trustee, with ultimate management responsibility that cannot be delegated
• Ensure the Investment Manager meets good-standing criteria (no disciplinary sanctions or relevant convictions in the prior five years, solvency, jurisdiction/regulation requirements, relevant experience, and four-eyes/six-eyes span of control) and provide written confirmation and documentary evidence to the JFSC, counter-signed by the administrator, Manager or trustee
• Appoint an administrator, Manager and/or trustee with Jersey resident directors, staff and physical presence in Jersey to monitor the Investment Manager's compliance with investment and borrowing restrictions and maintain sufficient records in Jersey
• Ensure adequate custody arrangements are in place and, for Open Funds, use a Jersey-based custodian/trustee unless the hedge fund prime broker exception applies or JFSC clearance is obtained
• Ensure the fund name is not undesirable or misleading and, if it implies a particular objective, region or market, that this is reflected in the fund's investment policy
• Notify the JFSC of any issues that might cast doubt on the good standing of the Investment Manager or its principal persons
• Seek prior JFSC clearance or case-by-case approval where the fund's structure or arrangements deviate from the Guide's stated requirements

Applies to

Expert Funds, Investment Managers, fund service providers, administrators, Managers, trustees, custodians, distributors, general partners

Related documents

• This document is made under Collective Investment Funds (Jersey) Law 1988
• This document is made under Financial Services (Jersey) Law 1998